Chinese auto industry to recover in mid-'09

Shanghai, December 24 (Gasgoo.com) In the first few months of 2009, China's automakers will have difficulty in pulling themselves out of the persistent financial crisis and auto market slump. But if the Chinese economy slows its downturn and the government bailout packages come into place, China's auto industry are likely to recover in the middle of next year, according to industry experts.

In the second half of this year, the oil price hike, stock market plunge, housing market depression and the macro-economy's slowdown have combined to stunt the sales growth of passenger vehicles in the Chinese market. But car buyers in China are some different from those in the European and American markets in that Chinese customers use their savings to buy cars while the western buyers borrow money from the bank for the auto purchase. This accounts for the strong buying power of the Chinese consumers even amid the financial crisis, and now they are partly playing the waiting game, just as in the housing market.

At the same time, the market demands for passenger vehicles remain high and huge in China. The potential auto-buyers who are now waiting and seeing are likely to swarm to the 4S stores in June or July when the Chinese economy is expected to warm up. In mid-2009, the Chinese auto market will start to recover from the slump. The market growth will speed up in the second half and the growth rate of the year may reach 8% or so, but hard to top 10%.

Affected by the global financial crisis and other factors, the rapid growth of China's auto market has slowed down in the second half of this year, and this impact will spread to the first half of next year. However, the influence of the global crisis on the Chinese auto market has not been so severe as on the U.S., European and Japanese markets, and the China market is still seeing its steady, if slow, growth. But the pressure is still there for China's automakers to deal with.

However, many automakers remain optimistic about their sales in the coming year and are seeking ways to boost their market shares. They are set to launch new models and cut vehicle prices to attract more buyers. Though the consumers will continue to view the auto market and products in a more sensible way, industry experts said that it still is quite possible for China's auto market to grow by 5%-10% in 2009.

"Car makers and buyers will act more maturely and practically in the year 2009. The auto companies are expected to care more about the consumer needs, the product quality and after-sales services if the buyers have become more careful with their money and will not loosen their purses as easily as before," said an auto sales executive.

When lower auto and oil prices and better road conditions are becoming parts of car drivers' daily life experience, the auto market will attract more and more customers who are waiting to buy cars to meet their own needs. What is left for the automakers to do is how to draw these customers by offering them suitable brands, high quality and good services.

China has launched an economic stimulus package worth nearly $600 billion, which includes more government investment in infrastructure such as highways and urban roads. This package is likely to grow next year. In addition, the Chinese government began to cut gasoline and diesel prices on Dec 19 and will scrap the highway tolls from January 1.

During a recent inspection tour of western Chinese city of Chongqing, China's Premier Wen Jiabao said at the city's automaker Changan Auto Group that difficulties in the country's auto industry are temporary and "China has a huge market." "The automobile industry has a long industrial chain and it is an industry the government should strongly support," he said.